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Flat tax for all

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by protiusx

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Here's the thing that I don't understand - Why should we punish an individual for having more of something than we do? If someone could provide a cogent answer to that I will eat my hat.

We have always exsisted under a capatilist economic system that essentially meant that if you built a better mouse trap you could get rich. What is wrong with wealthy people? I am not wealthy. I do not earn over $100K a year but I don't condemn those that do.

I agree with the fact that our national tax system should be replaced but it should be replaced with a national flat tax. Everyone pays x%. Everyone. No exceptions, no deductions, no refunds period. Simple and fair. "Well the rich make more than I do!" you say. Well your right. They do. So what. If the national flat tax was 5% and you made $25,000 a year you would pay $1,250.00 in taxes that year. The rich guy who made 2.5 million would pay $125,000. Sounds fair to me.

57 replies

by jimhm

The best system - would be a flat tax - research has shown that if a Flat tax was enacted - with the first $25,000 tax free. A Flat tax of 13% would be needed to meet the current ALL TAXes dollars received by the feds... I mean all Taxes - no just income - but all taxes! :) -

The question comes into play of the "Paying a Tax on a Tax" - they would have to say that first the fed's gets thiers - then the State - County - Local - otherwise your paying a tax on a tax ... or would that be Local, County, State, fed -

But the Democrates would never do it - because they can't tax the rich more than the poor - they can't keep you from passing your wealth onto your children - they wouldn't be able to control the have nots vote for them ... even tho they are some of the biggest haves in america... Heniz-Kerry over 1/2 a billion - Kennedy - Rockafella - the list goes on ...

by thechas

Where did you come up with the 13% figure.

The lowest rate I have ever seen proposed for just the federal tax rate is 17%

Dick Armey's proposal was for a 20% rate.

Check out the links on this page:

http://www.ncpa.org/pi/taxes/tax71.html#1

Or, just google flat tax or Value added tax.

And then, take a close look at your last federal tax return to see how much more you would have to pay.

The issue that many proposals that claim a rate lower than 17% fail to take into account is the size of the underground economy.
Which would GROW under a flat tax.
Why? small business would no longer be able to deduct many of the costs that they now can.

Even with a VAT, you will never capture a major portion of the illicit economy.
(Drugs, prostitution, and other criminal activities.)

Chas

by garion11

All these people complaining that ANY tax cut goes to the wealthy, should embrace the Flat Tax. Although I am against income taxes on any level, at this point, the best we can do is to change the current and confusing tax system in the US to a Flat tax system.

Simple and fair.

by boyd

Flat tax is a good, no great idea. But not as an income tax, as a national sales tax!

Think about it for amoment, no tax accounting, no tax returns and if you don't buy much, you don't pay much. Under a certain income could apply for a tax credit. The entire underground economy would immediately start paying a considerable amount of tax. Corporations would be like everyone else, if you have money to spend, you pay taxes on it.

I can't see anything wrong with this, can anyone else ?

by garion11

but Flat tax is like the first step towards an eventual National Sales tax/Consumption tax.

by wordworker

I completely agree. But if they go to flat tax, what will happen to all those law firms and accounting firms that are making a big fat living off interpreting all those exceptions, deductions, and loopholes? That's probably the biggest reason we won't see a pure flat tax - too many fat cats depend on the convoluted system we have now for their livings...

by garion11

Thats why we still have this stupid, crazy income tax. These damn lawyers special interests and accounting groups that pay money to keep this system in place.

by jardinier

Brace yourself for this Garion: you and I actually agree on something.

Of course it is the vested interests of lawyers, accountants, politicians, and wealthy people who minimise tax, that ensure that a simple, fair system is never likely to be introduced.

It would be SO EASY to introduce a flat tax (of say 20 per cent) without altering anyone's net income.

At the lower end of the wage scale, workers could be paid a higher gross wage. At the higher end, gross salaries could be reduced. Everyone could still earn the same net income as they do now, and the government could collect the same amount of tax.

The current graded tax system encourages dishonesty and discourages effort. Who will be motivated to work harder, if they are penalised by entering a higher tax bracket?

And because of this, workers at any level will try to conceal extra income by accepting cash-in-hand payments, for example.

Although there no doubt exist "flat tax" organisations, I personally consider it to be such an important issue as to be worth starting a new political party with flat tax as its foundation policy.

It would be one policy that the majority of citizens would be happy to embrace. Republican or Democrat, it doesn't matter, because it is only a relatively small proportion of the population who continue to benefit from this complex, unfair, irrational system.

by admin

a modest flat tax for essentials would be in our interest and greatly assist both our economic situation and GNP.

by oz_media

Unfortunately too many other issues are in the way and the high income earners and corporations get too many breaks and wouldn't end up paying much tax.

It takes my brothers law firm 3 weeks to do my taxes because there are SO many loopholes they find that reduce my taxable income, the other industry I am in is just a tax sponge, you simply pay tax on top of tax, my income from Europe is kept in Europe, otherwise it is taxed to hell here, income from the USA comes to Canada but I get taxed by the US AND Canada on it.!

So while you did say that you think no kickbacks or rebates would be in place in order to equate everyone's income level, there are still too many holes large companies can find that would allow them to declare less taxable income and end up not paying thier fair share.

Large companies spend within the company and can hide immense numbers as thier expenditures, I've seen it and the numbers are not even remotely funy. I've seen a company that turns nearly 1 million per day in business, pay the equivalent of $200,000.00 in income tax.

The problem to me isn't that rich get richer or they should pay more tax, I agree we should ALL pay the same percentage level of tax, even welfare bums would need to get thier acts together or end up audited for less than $6,000.00 annual income, I think the problem lies in WHAT is taxed. Businesses bury LARGE amounts of money in thier organizations and it is not taxable, whereas ALL of this income could/should be taxed.

Your idea SOUNDS fair, but unfortunately there are too many ways for those WITH money to avoid paying taxes on it. The general population would end up paying a much higher percentage of thier net income than large businesses and again we'd be left with 'the rich get richer'.

This would inturn make it virtually impossible for smaller or start-up business to operate in a fair condition environment and would be easily shut down by the bigger companies, so much for capitalism.

by garion11

The families and individuals that pay tax on their INCOME. Not the corporations/businesses/companies that are taxed a little differently. Since they don't pay taxes at all (because the tax is added to the cost of the product or service), the design of their tax structure is different.

Flat tax proposal in the US is applied to individuals and families, at least to my understanding.

by oz_media

I certainly appreciate you clearing this up and setting me straight though.

Are you trying to tell me that you don't have the same opportunity to legally bury income as a business does?

by boyd

I agree, but wait, there's more...
Flat tax is a great idea. But not as an income tax, as a national sales tax!

Think about it for amoment, no tax accounting, no tax returns and if you don't buy much, you don't pay much. Under a certain income level could apply for a tax credit. The entire underground economy would immediately start paying a considerable amount of tax. Corporations would be like everyone else, if you have money to spend, you pay taxes on it.

Other than the enormous amount of details, I can't see anything wrong with this, can you?

by Jay Garmon

This is a massive invitation to an income gap explosion. Without a graduated tax scale, you'll have a much larger separation in disposable income between income groups. This leads to inflation, which the wealthy are better insulated against. You're basically screwing the middle class by switching to this system (if you'd always been flat-taxing, this would be a different story).

Think of it this way: you have one dollar in disposable income, and I have ten. We both want to buy the same soda, which costs 50 cents. To make sure I get the soda, I overpay, buying it for $2, a price you can't match, but I can easily afford. If this happens consistently, the price of all sodas goes up, and therefore the buying value of the dollar (as measured by sodas) is reduced. Now all sodas cost $2, and you can no longer afford one.

This is a gross simplification, but illustrates the inflationary mechanism at work. Graduated tax scales are designed to counter this mechanism (as well as meet the general goal of all tax codes: to prevent anybody from hoarding cash by forcing you to reinvest).

Now, I'm no flat taxer, but I'm also no fan of overprogressive tax scales. When the economy tanks (like, say, in 2000) the wealthy get hit the hardest. If I make $10,000 and you make $100,000, and a recession decreases overall income by 5%, I've lost $500, and you've lost $5000. Same percentage, significantly different real-dollar loss. If the tax scale is weighted too far towards the wealthy end (like in California), a sharp economic decline will totally decimate tax revenues, because real-dollar losses are heaviest there (which, along with an energy crisis and an overdependence on flimsy tech industries, really gutted California's tax revenues over the last 5 years).

So while I wouldn't favor a flat tax, I wouldn't argue for the opposite extreme of heavily wealth-weighted taxation, either. A happy medium seems the order of the day.

My pop-economics take, anyway.

--Jay

by protiusx

Well said but I disagree with your premise that the intent of the "Graduated tax scales are designed to counter this mechanism (as well as meet the general goal of all tax codes: to prevent anybody from hoarding cash by forcing you to reinvest)."

The purpose of taxes is to fund the government. How does taxation force individuals to reinvest their money? If You have $100 and I take $25 from you how does that encourage you to part with any part of the remaining $75 for investment purposes? That is not logical. The opposite is true however which is what led to the tax cuts delivered to the people by the Bush administration.

Please explain to me how taking money away from me and giving it to someone else encourages me in any way to invest the money I have left over.

by Jay Garmon

I'm probably going to butcher this explanation, but a basic principle of economics is the multiplier effect, which basically says that when money is in "motion"--circulated by buying a selling--it grows. Keeping moeny liquid, like as cash holdings in a savings account (or mayonnaise jar) keeps it from growing, or benefitting anyone.

While, yes, the job of *taxation* is to fund government, the job of the tax *code* is to ensure that the money taken out of "motion" to fund the government does not arrest the multiplier effect too much. It does this by skewing taxation to most heavily impact liquid assets, namely cash. The most obvious example is the capital gains tax, which kicks in if you convert a working asset into excess cash (a simplification, yes, but generally true).

Disagreements on how much economic "motion" is worth sacrificing in exchange for government service (and the relative value of that servcie versus the economic benfits of motion) is pretty much the crux of all high-level political economic debate.

--Jay

by thechas

The problem that people neglect to take into account when proposing flat, VAT, or sales taxes in place of our present graduated income tax is just how high the tax level would need to be.

To be revenue neutral, (in the US) a flat tax would need to be around 25 to 30%.
And that is just for our federal taxes!

Unless you are making well over $100,000 a year, a flat tax would increase your taxes significantly.

My federal taxes for last year work out to 5.2%
Even the most optimistic estimates for a flat tax come in at 17% or more.

I don't know about you, but I do not desire to triple my taxes without a commensurate increase in government services.

Further, under your proposal of no deductions, small businesses would suffer significantly.

While I agree that the graduated tax system may need some additional tweaking, we should not throw out the baby with the bath water.

To my way of thinking, when you improve your situation so that you end up in a higher tax bracket, that higher tax rate is part of compensating America for the opportunity to improve your lot in life.

The tax rate structure is nowhere near as bad as it was in the 70's.
Back then, the top tax rate was over 70%
Now, the top tax rate is around 38%

Yes, it is true that the richest 5% of the US population pay 95% of that taxes.
Mostly, that is because they have or control 95% of the money.

Chas

by maxwell edison

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You said, without a commensurate increase in government services".

Why not a commensurate decrease in government services?

Isn't TWO TRILLION DOLLARS a year - 59 percent of which is used to fund social programs - too much already?

by thechas

Well Max, I do agree that we give away too much on a number of programs including social programs.

However, in order to reduce or end the welfare handouts, we need to invest a LOT of money in training to move these people out of their situation in a humane manner.

1. All social program benefit recipients must either complete a GED program or prove that they are mentally unable to do so.

2. Once the recipient has a GED or high school diploma they MUST enter a job training program, or community college program.

3. At the end of training, the recipient has 4 months to secure employment.
Medicaid coverage will continue for up to 6 months after the date of employment IF health coverage is not available from the employer.

Similar plans need to be in place for those in prison.

Lifestyle and behavioral restrictions WILL apply.

As to Social Security, that is much more complex to deal with.
Even the most cruel hearted among us would not suggest an immediate stop to benefit payments.
Maintaining payments for existing beneficiaries and setting up a private investment system for current workers would take time, and at least a period of higher rate FICA payments.

Then there are the programs that I would like to see more money invested in:

Re-newable energy with no fossil fuel involved.
(unlike the hydrogen proposal at present)

The space program.

Environmental science.

A replacement for road salt.

National parks.

Mass Transit and bicycle commuting facilities.

Chas

by oz_media

I have read a couple of your posts regarding the percentage spent on social programs, my question would be WHAT social programs et ALL THIS MONEY??

It cannot be just welfare checks, community centers etc. Otherwise these people would be better off. OR is it that there is such an extreme number of people relying on social services that it barely goes around?

Even a small percentage of Americans, on welfare for example, would equate to intense numbers I'm sure as your population is so large.

I am not plotting or baiting I am simply looking for a reliable answer.

by hotshot3000

>Why not a commensurate decrease in government services?

Isn't TWO TRILLION DOLLARS a year - 59 percent of which is used to fund social programs - too much already? <

Which social programs would you cut? One of the biggest one I know of goes to the arms industry.

Frankly, I like being able to drive on an Interstate without throwing my wheel alignment out of whack.

by hotshot3000

I agree with TheChas. If I'm in a higher tax bracket, at the end of the day, I'm still bringing home more than someone in a lower bracket.

All this talk of people paying 40-50% of their income in taxes fails to consider that few of us actually pay anywhere near the nominal rate for the bracket we are in. That standard deduction goes a long way in dropping your overall tax rate, unless you really make a lot of money.

I guess it's a case of that old adage, "the more you have, the more you want."

by maxwell edison

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The only concession I might make, however, is to have zero tax for those earning less than a certain amount - $25,000 (give or take), for example. That would only account for one or two percent of the total revenue, anyway, so it would be an insignificant amount, and make it easier to get through Congress.

ALSO - I would totally eliminate the payroll deduction system, so people had to write a check to the government each and every year. Let them really feel the bite taken out of their efforts.

Write one check for Income Tax.

Ouch!

Write another check for Social Security Tax.

Ouch Again!

And we should change the tax payment day to October 31st, an appropriate day, to say the least - AND right before people vote.

Now what was that political "give-away" promise you made???????

by garion11

"ALSO - I would totally eliminate the payroll deduction system, so people had to write a check to the government each and every year. Let them really feel the bite taken out of their efforts.

Write one check for Income Tax.

Ouch!"

LOLOL. This is still making me laugh as I type this. OMG, no politican on either side would propose this insane method. It would be death of their political careers. Sigh, bastages!! they do deserve it though.

by garion11

and actually implement it *GASP*, they will WIN in a landslide. Attack the IRS like a rabid dog. Even Republicans will vote Democrat, LOL.

by tomsal

I'm fine with taxes being deducted from my pay, just make them less.

I don't want to be responsible for writing two separate checks to the government each and every year.

I tend to think the majority of the diminishing middle clase in America would agree with me on that as well.

As far as making the due date 10/31 -- not many would like that either...right before the holidays you'd have to write a couple checks for thousands of dollars each?

by maxwell edison

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As long as people expect the government to take responsibility over various aspects of their lives, the government will have control over virtually every aspect of their lives. Yes, the government does indeed have control over virtually every aspect of your life. Think about it.

Births must be registered, and social security numbers are assigned; you're not a "child", but a tax-deduction; you're educated in government schools with a government dictated curriculum - sure, you can send your kids to a private school, but you still have to pay for the government schools; you can be drafted at 18, but you can't buy a beer; you go to work, and taxes are taken from your paycheck and sent to the government; you see all those workman's compensation signs in your break rooms, and you must abide by those rules; yes, you can start your own business, but only under the rules established by the government - and then they will not only take money from you, but from your business as well; you buy a house (another tax-deduction), and a government agency controls your mortgage; you pay a tax - each and every year - just for the privilege of buying a house; you sell the house, and you pay the government again for your capital gain - oh sure, you can avoid that capital gain, but only when and how the government dictates; you register your car with the government, and you can't go anywhere without them knowing about it; you must insure your car, and if you don't carry your insurance card with you, you'll be ticketed and the government takes more money; if you buy anything at all, the government takes more money in the form of a sales-tax, not to mention the additional gas-tax they gouge you with every time you buy gasoline; it you die, they take more money in the form of inheritance tax; you must "check-in" with the government every year, on April 15th, and let them know how you're doing - and they will take more money from you in the process; you fear an IRS audit more than you fear almost anything; you retire on social security, money taken from you for your own good, but it's given back (maybe) on the government's terms - and if you die prematurely, "your money" is kept by the government, you can't give it to your kids; you can save for your own retirement, in the form of a 401(k), but you can use it only in a way that the government allows - if you don't, the government will penalize you, and take your money away from you.......oh my gosh, and all this without even thinking about it - I could go on and on and on and on and on. You can't be born, be educated, get married, work, recreate, or retire without the government setting the rules - and charging you for it.

And you can't do anything about it until you take back the power. But the only way to take back the power is to take back the responsibility for your own life. Freedom and individual liberty? Yea, right. One hundred years ago, perhaps, but not today. Mr. Jefferson's dream took the first pill towards its doom in 1936. It met its final demise in 1965. From that point on, the dream became a nightmare. Think about this, the Russians, today, have more freedom and individual liberty than the Americans who helped them secure it. With a little more time and effort, so will the Iraqis.

You don't own your life. the government does. The government holds all the cards and has all the power. And the government exercises that power and control, not with guns (although they would), but with the tax code.

Slowly but surely, we've relinquished our freedom and liberty - all for a life of presumed security. What's that old saying about the frog in the pot of water on the stove? Man, it's getting hot in here.

by john_wills

It is no great innovation for Russia to have a 13% flat tax because that's what the USSR had in the 1950s.

by maxwell edison

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I didn't know that the USSR had a flat tax rate of only 13 percent in the 1950s. Where did you find that information? Were there any other taxes assessed during that time? If so, how much and on what?

by thechas

Hi Oz,

I'm sure that Max can add in some more information.

Approximately 50% of the US federal budget goes to entitlement programs.

Without passing specific legislation, neither the President or Congress has direct control over the expenditures.

The entitlement programs include:

Food Stamps

Medicare

Medicaid

Social Security

Welfare

And of course the bureaucracies that are required to run these programs.

Chas

by maxwell edison

.
...that we immediately and fully cut-off any programs. It's taken us 50 years to get into this mess, and it will take another 50 to get out of it.

Today, I'll settle for a change in expectations and a change in direction; and that will initially require a change in dialogue.

by maxwell edison

.
......that takes a dollar from the person who earned it, and puts it in the hands (by way of cash, goods, and/or services) of the person who did not. Welfare, as it's imagined, is significant, but only part of it.

They include, but are not limited to, welfare, medicare, medicade, prescription drug programs, social security, aid-for-dependend-children, food stamps, school lunch programs, housing subsidies, farm subsidies, homeless shelters, funding for arts programs, and on and on.

by garion11

Like the $14 billion "aid package" to Argentina, Bosnia war (which is still happening) during the Clinton reign, $15 billion for Aids in Africa, Iraq war/rebuilding, aid to Turkey, Pakistan (during the Bush reign), and NK (across both administrations).

http://www.usaid.gov

This is why the government shouldn't be allowed to have all this money. What it proposes to do while taking your money, does not end up as government services of equal return (cause there is no way to measure it). For instance, I pay 35 cents on the parkway in NJ every crossing of the county line (and exit and entrances). Of that 35 cents, did you know that 20 cents is going towards paying the guy collecting my money?? Yet I still see pot holes and stupid junk on the parkway. Thats insane.

I think the only time both parties agree is whether to spend or not.

by garion11

Yeah I know its amazing, I agreed with OZ (in a previous post) and now you. Sadly in the US, both parties do it. Democrats take away 30% of my money, while Republicans take away 28%. Sigh!

by garion11

As if tax Flat Tax isn't already a compromise from the current one, but seriously, we know that these special interest groups are working hard to keep the system the way it is.

So I propose that we simplify the Individual/Family Income tax (to a flat tax) and leave the corporate/business tax the way it currently is (complex and stupid!) at least to my understanding. Any thoughts?

by thechas

A simplified flat tax makes more sense for business than for individuals.

The big benefit of a simplified tax structure is the cost of paperwork and compliance.

With a flat tax for business, they would be more competitive on the world market, and make decisions based on the business issues not the tax implications.

As I have stated before, business do NOT pay taxes. Any tax levied on a business are factored into the cost of the product or service.

Much like negotiating with the salesman at a car dealer, many people enjoy the small victories that they get from "working" the tax code.
There are many things that one can do to reduce their annual tax burden.

Of course, that is the real unfairness of the present US tax code. The amount of taxes one pays is more based on your willingness and ability to take advantage of the numerous intricacies of the tax code.

Chas

by maxwell edison

.
As long as people expect the government to take responsibility over various aspects of their lives, the government will have control over virtually every aspect of their lives. Yes, the government does indeed have control over virtually every aspect of your life. Think about it.

Births must be registered, and social security numbers are assigned; you're not a "child", but a tax-deduction; you're educated in government schools with a government dictated curriculum - sure, you can send your kids to a private school, but you still have to pay for the government schools; you can be drafted at 18, but you can't buy a beer; you go to work, and taxes are taken from your paycheck and sent to the government; you see all those workman's compensation signs in your break rooms, and you must abide by those rules; yes, you can start your own business, but only under the rules established by the government - and then they will not only take money from you, but from your business as well; you buy a house (another tax-deduction), and a government agency controls your mortgage; you pay a tax - each and every year - just for the privilege of buying a house; you sell the house, and you pay the government again for your capital gain - oh sure, you can avoid that capital gain, but only when and how the government dictates; you register your car with the government, and you can't go anywhere without them knowing about it; you must insure your car, and if you don't carry your insurance card with you, you'll be ticketed and the government takes more money; if you buy anything at all, the government takes more money in the form of a sales-tax, not to mention the additional gas-tax they gouge you with every time you buy gasoline; it you die, they take more money in the form of inheritance tax; you must "check-in" with the government every year, on April 15th, and let them know how you're doing - and they will take more money from you in the process; you fear an IRS audit more than you fear almost anything; you retire on social security, money taken from you for your own good, but it's given back (maybe) on the government's terms - and if you die prematurely, "your money" is kept by the government, you can't give it to your kids; you can save for your own retirement, in the form of a 401(k), but you can use it only in a way that the government allows - if you don't, the government will penalize you, and take your money away from you.......oh my gosh, and all this without even thinking about it - I could go on and on and on and on and on. You can't be born, be educated, get married, work, recreate, or retire without the government setting the rules - and charging you for it.

And you can't do anything about it until you take back the power. But the only way to take back the power is to take back the responsibility for your own life. Freedom and individual liberty? Yea, right. One hundred years ago, perhaps, but not today. Mr. Jefferson's dream took the first pill towards its doom in 1936. It met its final demise in 1965. From that point on, the dream became a nightmare. Think about this, the Russians, today, have more freedom and individual liberty than the Americans who helped them secure it. With a little more time and effort, so will the Iraqis.

You don't own your life. the government does. The government holds all the cards and has all the power. And the government exercises that power and control, not with guns (although they would), but with the tax code.

Slowly but surely, we've relinquished our freedom and liberty - all for a life of presumed security. What's that old saying about the frog in the pot of water on the stove? Man, it's getting hot in here

by tomsal

I guess I'm lacking in the paranoia area then.

I just don't think all the stuff you mention is really a bad thing. For one, you need government to an extend -- else you'd have chaos. A structured society needs guidelines and rules, and there has to be a level of discipline. Sorry to bring up my martial arts background again...but its the old philosophy of ying and yang -- positives that balance the negatives.

My problem isn't with the government requiring me to have a tax ID (aka Social Security Number) or a birth certificate. Its not that they require I have PMI for my Mortgage, or that I need insurance to legally drive my car. That stuff makes logical sense to me to be a requirement.

The stuff I don't like is the EXCESSIVELY high taxes we pay for services, wasteful government spending on the silliest of things, overly lax administration and enforcement of government assistance programs (like welfare for example) whereby people can too easily take advantage of it. Then the folks that REALLY need it, have a hell of a time getting help.

THAT's the issues where I'm with you about "down with government".

In other words I recognize the need for government for an organized, structured society....just not a government who acts like a thug and says "yo -- here's ANTOHER rule that makes no sense but we are your master OBEY!"

by maxwell edison

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Concerned does not equal paranoid; and a desire for less government does not equal no government.

(I do wish that people around here wouldn't make such stretches. It really does take away from constructive dialogue.)

Perhaps I need to hone my literary skills to do a better job making a point. Or perhaps, it's not my literary skills at all. Maybe it's not possible for absolutely everyone to see the point being made.

By the way, did we not have a "structured society" before 1936? Of course we did, but without the massive government infringement into everyone's every-day life.

by tomsal

Touche'

I'm just hacking on you.

You make a fine point, I tend to easily fall into the "devil's advocate" role sometimes however. So don't worry about your literary skills, they are fine.

I agree a desire for less gov't doesn't equal no gov't.

No offense intended man!

Live long and prosper..lol

by garion11

If I am not mistaken, its still in effect. Now once they understand how Capitalism works and kick into high gear, holy cow watch out. Their economy will be HUGE, and can or will beat the US, unless we switch to Flat Tax as well (to stay competitive).

by maxwell edison

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And for some reason people don't want to differentiate between government spending on infrastructure and government spending on social programs. The former would include spending for roads and bridges, airports, the military, air traffic control, government employee payroll, fire and police protection, and so on. I'm not opposed to that, nor would any rational person be opposed. The latter, however, are dollars taken from the person who earned them, and given to a person who didn't earn them - all under the pretense of somehow making that person's life better.

My opposition to social spending is two-fold. First of all, it's not fair. It's not fair to the person from whom the dollars are taken, and it's not fair to strip a person from accepting personal responsibility for his or her life. And second, it's contrary to the intended purpose of the United States government. It's simply not the role of government - at least not the US government.

The arms industry, as you put it, or defense spending as it's listed in the federal budget, actually accounts for only 15 percent of spending, while social spending, on the other hand, accounts for almost 60 percent. We spend about 15 percent for interest on our HUGE debt, and the other 10 percent is absolutely everything else.

But yours is a common misconception. We spend four times as much money on social programs as we spend on the military. (In 1960, those numbers were reversed.)

Did you know, by the way, that out national debt is, right now, at about 8 trillion dollars? Guess how much money we've spent on social programs since the mid 1960s? That's right - about 8 trillion dollars. When (and if) this debt is ever paid off, who's going to have to pay? That's right again, our kids and grandkids. What will they do for their social needs if these programs remain intact? How can they pay for both theirs and ours? Or is the debt load going to continue to be held indefinitely, never to be paid off? That would not be a wise thing to do - especially considering the dollars spent on interest. Also, consider that much of our debt is being carried by foreign nations. What if they decide to not renew the debt? what if they call it due and payable?

This is not a smart place to be. And it boggles my mind to see so many people who fail to understand the seriousness of maintaining the status quo - and to think that there are others who want it to grow!

But I'm not expecting that we just cut it off, cold-turkey. We took 50 years to get into this mess, and it will take another 50 to get us out of it. What we need to do right now, however, is change expectations, emphasize personal responsibility, start to turn things around, and not remain on this same perilous path; and most importantly, we need to change the dialogue so we can start reversing the trend.

by thechas

Many of the reasons given for switching to a flat tax equate to simplification of the tax code.

Why not just simplify the tax code?

Keep a "standard" deduction.

Lower the overall tax rate, but continue to have 4 or 5 brackets that are spread a bit more than they are now.
Include an indexing factor for the brackets based on the median income.

The big area where the US tax system needs to be reformed is business taxes.
Changing the business tax to a flat tax would have a significant impact on business competitiveness.

Further, we need to get realistic, and admit that businesses do NOT pay taxes.
Any tax levied on business income comes out of our pockets in the cost of goods and services, or lost jobs!

For starters, here is an option:

Business tax rate 25%
Rate reductions for:

Pay ALL employees at least a "living" wage -5%

Exceed pollution reduction targets -5%

Offer a health plan for all employees -5%

Just doing what a "decent" and conscientious employer would do would result in dropping the tax rate from 25% to 10%
Then, we drop the base business tax rate 1% per year for 10 years, and all "good" businesses would pay no income tax.

Chas

by maxwell edison

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Actually, I've always known it, but the light is really shinning brightly on it right now.

It's not the tax, per se, that I'm so opposed to. I'm all for paying my fair share (or more, even) to pay for the necessities of maintaining a structurally strong, and socially sound nation. But it's the infringement into the every-day lives of the people in the process of collecting and doling out the tax dollars. Geesh, I can't take a s%$& without the government getting involved - and they almost always "get involved" in dictating how people live either in either collecting the tax or giving it away. Okay, I give up - take my money, but leave me the hell alone. Why must I answer to the government every time I turn around? Let me make my own decisions, don't force me to do anything.

They use the tax code as their tool to exercise power over the people. And that's what I really despise about it.

by garion11

Now they are tools like any politican once he sees $$$. Republicans opposed Income tax and the creation of the IRS back in the day, pre WWI if I am not mistaken, during the Federal Reserve creation.

Their reason was, once we have a tool to F*&K with people, it will be used and reused and abused. Do you know what the original income tax was? 1% of income by the top 1% of income earners. Look what it bloated into...a monster of unbelievable proportions...which as Max said, interferes with our daily lives.

Now too many people depend on it and I am afraid its here to stay. Income tax is sooo unconstitutional, but we stopped following that a long time ago, so whats the point.

by thechas

Max,

The root problem with the US tax code is that every deduction and special situation has a constituency and a lobbyist.

Be it the home building industry, charities, oil companies, the mining industry, farming, the Small Business Administration, ALL are scared to death of the consequences of loosing their respective deductions and tax credits.

At the anticipated 17% to 20% rate of a flat tax, the US economy has a strong potential to be devastated.
Even with a $25,000 or $50,000 personal income exemption, many a middle class homeowner would no longer have enough after tax income to afford their mortgage.

Charity organizations have studies and surveys that suggest they would loose a lot of donations if the donations were no longer deductible.

I don't have a specific answer for the problem of behavioral modification via the tax code.

Just pointing out that there are a lot of groups with a lot of political clout that will make it difficult to make any significant reform to the US tax code.

Chas

by admin

It doesn't have to stay. We still (at least so far) have the ability in this country to rise up and vote for whoever we want. We don't HAVE to settle for the lesser of two evils, and we can demand change and support people who will listen and create this, but for some damn reason, we keep saying that the votes that count are the ones that go to the people who spend spend spend spend spend or else to the people who spend spend spend spend spend. It's like a whole bunch of people standing around watching people bullying each other and no one wants to jump in until they think most everyone else jumps in first.

The sad irony is, that most people would have jumped in if the others would when you ask them away from the crowd.

We the people CAN change this collectively. Heck, even if we got less than half with some luck in the electoral college we could stop this in short time.

I am so increasingly (as if that's possible) going to vote Libertarian! The tax structure is like a stinky cancer on this land. Get rid of it!

by maxwell edison

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A "catch-22" situation as follows:

Principle: Although I don't agree with all the Libertarian Party platform (another discussion would be necessary to elaborate), it's the closest thing to satisfying all (or most) of my ideals.

Reality: Even one election cycle, if control went to the Democrat Party, could adversely affect my desired outcome for less government (or less more-government, if you know what I mean).

Catch-22: Vote Libertarian, and I overlook reality; vote Republican, and I overlook principle.

Solution: Face reality, and deal with it. This would mean supporting the Republican Party until a time that the Libertarian Party becomes a force to be reckoned with. However, at the same time, work behind the scenes to advance the cause of the Libertarian Party.

Analogy: I've got this great automobile in the garage, but it barely runs. It has this radical look to it that many other people can't appreciate, and it just can't keep up with the other cars on the road. What I should do is work diligently on this garaged car, get it looking sharp and running great, and then - and only then - will I take it out on the road to compete. In the meantime, this second car I have will have to do.

Question: What needs to be done to make the Libertarian Party as strong a force as the Democrats and Republicans, but without casting votes for them (at this time)?

Alternative: Or is it more realistic to try to change the Republican Party from within, in an attempt to return it to its more traditional libertarian (or original conservative) roots - such as the party of Goldwater?

What to do? What to do?

by admin

Working behind the scenes is awesome. Anything that helps :) Financially supporting them, even if it just means checking a dollar on your tax return for the Presidential Election fund helps.

Your verbal support helps, even if you are encouraging people to vote Republican, think of this true scenario. I have swayed several friends who were going to vote, but refused to vote in the Presidential because they did not want either candidate. In this case it would be better, I think, even with your understood stance, to encourage them to vote Libertarian. A vote of a person who would otherwise not vote will not help the Democratic cause, which you fear, neither will it hurt the Republicans.

I believe it will help force the Republicans to make a clear choice in the future as the Libertarian party gains strength. Either return to your roots, or increasingly lose support is the message sent. I do not believe the current state of the Republican Party (or Democrat for that matter) will improve any other way. As long as they maintain strong conservative support at the polls they will continue in the road they are on. When they begin to realize votes are leaving them based on issues such as taxation and spending, they will most likely follow those that left in an effort to regain those votes.

I believe you can help by encouraging every person who refuses to vote Bush and won't budge on that to consider voting Libertarian. You also may want to encourage those who would vote for Kerry to consider a Libertarian vote. This will help both your short and long term goals I believe. You can drive your car to work until the day you can drive the sharp one to the races :)

by garion11

http://www.drudgereport.com/

XXXXX DRUDGE REPORT XXXXX SUN AUG 01, 2004 21:01:25 ET XXXXX

REPUBLICANS PLAN PUSH FOR ELIMINATION OF IRS

**Exclusive**

A domestic centerpiece of the Bush/GOP agenda for a second Bush term is getting rid of the Internal Revenue Service, the DRUDGE REPORT has learned.

The Speaker of the House will push for replacing the nation's current tax system with a national sales tax or a value added tax, Hill sources tell DRUDGE.

"People ask me if I?m really calling for the elimination of the IRS, and I say I think that?s a great thing to do for future generations of Americans," Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.

"Pushing reform legislation will be difficult. Change of any sort seldom comes easy. But these changes are critical to our economic vitality and our economic security abroad," Hastert declares in SPEAKER: LESSONS FROM FORTY YEARS IN COACHING AND POLITICS.

"?If you own property, stock, or, say, one hundred acres of farmland and tax time is approaching, you don?t want to make a mistake, so you?re almost obliged to go to a certified public accountant, tax preparer, or tax attorney to help you file a correct return. That costs a lot of money. Now multiply the amount you have to pay by the total number of people who are in the same boat. You can?t. No one can because precise numbers don?t exist. But we can stipulate that we?re talking about a huge amount. Now consider that a flat tax, national sales tax, or VAT would not only eliminate the need to do this, it could also eliminate the Internal Revenue Service (IRS) itself and make the process of paying taxes much easier."

"By adopting a VAT, sales tax, or some other alternative, we could begin to change productivity. If you can do that, you can change gross national product and start growing the economy. You could double the economy over the next fifteen years. All of a sudden, the problem of what future generations owe in Social Security and Medicare won?t be so daunting anymore. The answer is to grow the economy, and the key to doing that is making sure we have a tax system that attracts capital and builds incentives to keep it here instead of forcing it out to other nations."

Developing...

HOLY S**T. Yeah I will believe it when I "officially" hear about it, but I can't believe this thing is even on the table. Again HOLY S**T.

by maxwell edison

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I've see a great article on Value Added Tax - addressing absolutely every question about it.

When I find the atticle again, I'll post it.

Man, this would be big news, and make for a very spirited election.

(Drudge, by the way, has been estimated to be about 38% accurate in his "scoops". That's where I first saw the "bin Laden surrounded "scoop".)

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